Almost half of financial services executives ignorant of new EU MiFID II rules

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Dec 08, 2017
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Companies that fail to comply with the rules could be fined €5 million

John Sibley/Reuters

Nearly 40 per cent of British financial companies are unaware whether they comply with updated EU rules coming into force in the new year, research has found.

The Markets in Financial Instruments Directive II (MiFID II) rules will regulate businesses that deal in shares, bonds, units in collective investment schemes and derivatives.

Affected businesses will be obliged “to record all communications that are intended to result in a transaction”.

That provision will apply regardless of the original source of the communication, “whether on a mobile phone, legacy call recording system, cloud based solution or a newly installed recording system”. Recordings must be stored for at least five years and companies can be fined up to €5 million (£4.4 million) or 10 per cent of annual turnover for non-compliance.

However, according to a survey of UK financial services executives, 39 per cent were unaware whether their organisation was compliant. Another 25 per cent said that their business was not compliant, while nearly 30 per cent said they were going through the compliance process.

The study found that 14 per cent of staff were unaware of what processes were required to meet the new rules, 37 per cent were in the process of initiating a training programme and 41 per cent did not know whether staff were aware of the legal requirements of the directive or had received any training regarding it.

“It’s clear that many businesses are massively unprepared for MiFID II, despite having had the last 12 months to prepare for the impending legislation,” said Kevin Linsell, the chief technology officer at Timico, the Nottinghamshire-based business consultancy that commissioned the research.

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